Managing finances is a very important thing to do, to ensure that your monthly salary is enough to cover your needs. Your ultimate goal should be for your income to not exceed your monthly expenses.
Managing your income is not as easy, you may encounter a problem due to the difficulty when managing finances. This is because usually after you receive your monthly salary, most of the money will go straight to another post, and for some, they even prioritize non-basic needs. This can be the main reason why your income can’t cover your needs well enough, and you also do not have the means to save up some of your income.
To help you out on this matter, we have created the best tips which can help you manage your salary better. Thus your personal financial situation can be well-protected.
Table of Contents
1. Make a spending plan and prioritize your needs
In managing your finances, you need to make a clear and detailed spending plan. Expenditures are better prioritized clearly to ensure your income can cover your primary needs. You should never prioritize secondary needs, just because you think you want or need them. What you think and what you need can be somewhat deceiving.Â
Thus, creating a financial budget can be a way for you to ensure funds for monthly needs such as rent, water bills, electricity bills, internet, and many more are covered in the first place. You can use this financial formula, 40% for daily needs, 30% for paying debts or installments, 20% for savings, and 10% for other needs. By applying this strategy, you will have a bigger chance to make sure your salary can be enough to cover all of your needs.
2. Create a budgeting post
Every time you earn your salary, immediately distribute it to each budget post that has been made. Don’t ever delay this process, because it can result in you using your money for unplanned expenditures.
This can be the ultimate reason why your salary runs out and that you will not have time to allocate a penny and thus won’t be able to cover your spending plan. Keep in mind that you have to act disciplined in tightening up your budget and make it in line with your financial budget.
3. Record every expenditure realization
After you make a plan, you should try not to deviate your spending from the budget. To make sure you can recount all of this and ensure you can keep everything under budget, you should keep every expense recorded in detail every time you spend money. Having this recorded detail can help you to manage your finances better or even anticipate when unforeseen conditions such as hospital bills when you are sick, or rent prices increase, happen.
4. Evaluate the expenses budget
From time to time, you should evaluate your expenses budget. As a first approach, you should check whether the funds that you have planned are ideal or not. Checking whether the expenses are swelling or not can help you to decide whether you need to exercise more control when facing this kind of situation.
5. Invest in an emergency fundÂ
Don’t forget to set aside some budget every month to save as your emergency fund which will be covered for your future needs. You can allocate a certain amount of money each month or pay for a separate insurance. Having an emergency fund is truly important because it will be very beneficial for you in case you are experiencing unwanted circumstances.
6. Have two separate bank accountsÂ
To manage your finances better, you need to have 2 different bank accounts. You can use the first account to carry out all transaction activities such as paying bills and others. Meanwhile, for the other bank account, its function is to save money only.Â
7. Pay off debts and installments
In managing your daily salary, in addition to meeting your daily needs, you must also prioritize paying off debts that have accumulated right away after your payday.Â
If the debt is not repaid immediately after, do an analysis and count how many times you have to deposit money so that the dependents of the debt can be resolved quickly.Â If you want to repay in installments, adjust 30% of your daily salary income and think again if you want to buy something that is not your main or basic need.
8. Compare expenses and budgets
Another step you can take to manage your salary is to compare your spending plans. When you see that the plan you make is very different from reality, you should make revisions immediately to ensure it does not exceed your income. Do double check, and you can find out what causes the expenses to be exceeding each day.Â Â
9. Look for additional income
If it turns out that your salary is unable to meet your daily needs, even the basic ones – then another thing that you should do is to find another job that can provide you with a bigger salary or additional income to meet your needs.
Additional income can come from anywhere, such as starting a business, being a freelancer, opening an online shop, and many others. That way your daily needs can be met properly and you can even start to save money in the future.